Legal Watch Bulletin - June 2017

FTC’s Maureen Ohlhausen Addresses Internet Openness

Acting Federal Trade Commission (FTC) Chairman Maureen K. Ohlhausen issued the following statement on the Federal Communications Commission’s adoption of a Notice of Proposed Rulemaking to reinstate a light-touch regulatory approach protecting Internet openness:

“I welcome the adoption of this NPRM as further progress toward restoring the FTC’s ability to protect broadband subscribers from unfair and deceptive practices, including violations of their privacy. Those consumer protections were an unfortunate casualty of the FCC’s 2015 decision to subject broadband to utility-style regulation. This new proceeding offers an opportunity to undo that decision and thereby return broadband consumers to the expert protection of the FTC.”

“Furthermore, I congratulate FCC Chairman Ajit Pai for adopting an open and transparent process for input. I hope that all who participate in this process will do so in a civil and thoughtful manner befitting the importance of this topic.” (FTC May 18, 2017)

Here is a link to the release

FTC settlement with Turn Inc. Regarding Tracking Consumers Who Have Opted-Out

Turn Inc., which enables sellers to target digital advertisements to consumers, agreed in December 2016 to settle FTC charges that it misrepresented the extent to which it continued to track consumers even after they opted-out of such tracking. The company’s privacy policy told consumers they could block targeted advertising by using their web browser’s settings to block or limit cookies. The FTC’s complaint alleges, however, that Turn used unique identifiers to track tens of millions of Verizon Wireless customers, even after they blocked or deleted cookies from websites. The opt-out mechanism also only applied to mobile browsers.

The FTC consent order bars Turn from misrepresenting the extent of its online tracking or the ability of users to limit or control the company’s use of their data. Turn also must provide an effective opt-out for consumers who do not want their information used for targeted advertising and place a prominent hyperlink on its home page that takes consumers to a disclosure explaining what information the company collects and uses for targeted advertising.

Here is a link to the settlement docs 

FCC releases proposal to roll back Net neutrality FCC rules

The Federal Communications Commission (FCC) recently published the text of its proposal to roll back the agency's net neutrality rules, allowing the public to comment on the new plan.

The agency's commissioners voted along party lines in support of the proposal, which aims to fulfill FCC Chairman FCC Ajit Pai's promise to eliminate the utility-style regulatory framework the FCC adopted in 2015. Under the proposal, the FCC would throw out the legal underpinnings of the net neutrality order, which reclassified broadband as a so-called Title II utility service under the Communications Act.

Here is a link to the proposal

A.G. Schneiderman Announces $4.19 Million in Settlements with Six Companies That Illegally Purchased and Resold Hundreds of Thousands of Tickets to Concerts and Other New York State Events

Five of the companies regularly used illegal bots to procure tickets for sale on the secondary market. One broker purchased 1,012 tickets to a U2 concert at Madison Square Garden in  one minute. 

Here is a link to the release
Here is a link to the documents

FTC Sends 90 Letters to Influencers and Others Regarding Compliance and Disclosure When Endorsing or Promoting Products through Social Media

After reviewing numerous Instagram posts by celebrities, athletes, and other influencers, Federal Trade Commission staff recently sent out more than 90 letters reminding influencers and marketers that influencers should clearly and conspicuously disclose their relationships to brands when promoting or endorsing products through social media.

The letters were informed by petitions filed by Public Citizen and affiliated organizations regarding influencer advertising on Instagram, and Instagram posts reviewed by FTC staff. They mark the first time that FTC staff has reached out directly to educate social media influencers themselves.

Here is a link to the release

FTC Stops False Advertising, Phony Reviews by Online Trampoline Sellers

Two brothers have agreed to settle Federal Trade Commission charges that in marketing and selling their trampolines, they deceived consumers by directing them to review websites that claimed to be independent but were not, and by failing to disclose that one of the brothers posted online product endorsements without disclosing his financial interest in the sale of the products.

Under an administrative consent order announced today, Son “Sonny” Le and Bao “Bobby” Le are barred from engaging in such deceptive behavior in the future and must clearly and conspicuously disclose any material connections between a reviewer or endorser and the product being reviewed.

Here is a link to the documents 

Supreme Court Rules on Patent Law on Impression Products vs. Lexmark

The Supreme Court dealt a major blow to corporations that try to use patent law as a weapon against other firms, saying that companies can only be sued for patent infringement in the places they actually do business.

Now, the Court has ruled again along those same lines, handing a victory to consumer groups in a case about printer cartridges — or more specifically, toner cartridges, the kind used by laser printers. The case has huge implications for the way we think about technology ownership in America, and your rights as a user. The case is called Impression Products v. Lexmark.

Lexmark does a lot of business with corporate customers, so if you work in an office, you might know the name from seeing it on your printers there. Those machines rely on toner cartridges, which must be changed every so often when they run out, just like ink cartridges in your home printer. And just like home printing, laser printing hinges on a razor-and-blades business model where much of the manufacturer's income depends on the reliable sale of new toner cartridges.

To protect its business model, Lexmark basically did some things that made it harder for people to get cheap, used cartridges on the secondhand market. Those tactics were designed to make it more likely for customers to choose Lexmark's own cartridges, according to the Court. While there's nothing specifically illegal about this, the Court said, a company such as Lexmark can't try to use patent law to stop other companies, such as Impression, from reselling its old cartridges.

What did Impression do, exactly? Companies like Impression make money by buying up old toner cartridges, refilling them with more toner and then selling them at a lower price than what Lexmark charges.

Lexmark argued that by refurbishing and reselling its cartridges without permission and outside the terms of Lexmark's service agreement with end-users, Impression was violating the patent that Lexmark held on the cartridges. Essentially, Lexmark was saying that its patent rights extended beyond the initial sale of the cartridge to cover even future resales.

For further details here is a link to the Supreme Court case